Take Two and Call Us in the Morning? Netflix Doles Out a ‘Poison Pill’ in the Name of Shareholders

News about Netflix was streaming live over the news wires this week, as the company moves to tune out any hostile takeover.

Plenty of BetterInvesting members are among Netflix’s shareholders, whom the company says it’s protecting with a “stockholder rights plan” crafted to fend off unwelcome advances. Netflix is No. 129 on BetterInvesting Magazine’s “Top 100 Companies Held by Our Members.”

CNN Money reported Monday that “the plan, known to investors as a ‘poison pill,’ would kick in if an individual or group tried to buy a sizable chunk of the company without approval from Netflix’s board. If that happened, Netflix can now use a technical maneuver to flood the market with new shares and make a takeover prohibitively expensive.

“The defensive move is a direct response to notorious corporate raider Carl Icahn, who bought a 10% stake in the company last week. Icahn set off Netflix’s alarm bells when he said the company would make tasty bait for a tech giant already in the video business. Microsoft (MSFT, Fortune 500), Apple (AAPL, Fortune 500), Google (GOOG, Fortune 500), Amazon (AMZN, Fortune 500), Verizon (VZ, Fortune 500) or Comcast (CMCSA) come to mind.

“The poison pill kicks in if an investor acquires 10% or more of Netflix’s shares — or 20% in the case of institutional investors like Icahn — in a deal not backed by the company’s board. Icahn currently controls a 9.98% stake in the company.

“Icahn lashed back Monday afternoon, saying that ‘any poison pill without a shareholder vote is an example of poor corporate governance.’”

“Icahn also said that he believes Netflix’s board holds too much sway over shareholders in general,” CNN reported.

And the shareholders think?

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